First the AtlantaFed (with occasional shoulder-tapping exceptions) created a mini revolt in the way GDP was tracked on a day to day basis with its GDP Nowcast, one which pressured the NY Fed to create its own version (influenced by Goldman's own economic models as the Atlanta Fed's number are seen as too pessimistic), and now the same Atlanta Fed is casting serious doubt over the government's official inflation numbers, with its own "sticky-price" CPI tracker.
As it explains, "The Atlanta Fed's sticky-price consumer price index (CPI)—a weighted basket of items that change price relatively slowly—rose 2.0 percent (annualized) in March, following a 2.7 percent increase in February. The 12-month percent change in the index was 2.5 percent."
In other words, this is a tracker of core-core CPI.
The components that make up sticky vs flexible price items are revealed in the table below. Once again, the "stick-price" items are largely what the BLS defines as "core."
Here is a brief summary of what this indicator measures:
Some of the items that make up the Consumer Price Index change prices frequently, while others are slow to change. We explore whether these two sets of prices—sticky and flexible — provide insight on different aspects of the inflation process. We find that sticky prices appear to incorporate expectations about future inflation to a greater degree than prices that change on a frequent basis, while flexible prices respond more powerfully to economic conditions— economic slack. Importantly, our sticky-price measure seems to contain a component of inflation expectations, and that component may be useful when trying to gauge where inflation is heading.
So where is inflation heading? According to the just released update from the Atlanta Fed, sticky inflation is now at a six year high and rising.
Perhaps the FOMC should consider this explanation of why US household spending continues to dwindle (as rising inflation on core purchases continues to eat away at the US household's purchasing power) when deciding whether "global events" are enough to offset what are now clearly rapidly rising core inflation pressures.